How to know if the trend will end soon? 90 seconds to learn how market cycles works.

I mostly employ two oscillators. What is the purpose of oscillators? They are, in general, momentum indicators. They also indicate whether something has been overbought or oversold. Some individuals rely on them to determine when to purchase and sell.

There are several indicators, and I’ve never intended to utilize them all. I grew quite familiar with two indicators: my MACD and the Slow Stochastic.

MACD http://StockCharts.com Definition: Developed by Gerald Appel, Moving Average Convergence/Divergence is one of the simplest and most reliable indicators available. MACD uses moving averages, which are lagging indicators, to include some trend-following characteristics. These lagging indicators are turned into a momentum oscillator by subtracting the longer moving average from the shorter moving average. The resulting plot forms a line that oscillates above and below zero, without any upper or lower limits. MACD-centered oscillators apply.

MACD, as a momentum indicator, can predict movements in the underlying asset. MACD divergences can be important indicators of a trend shift. A negative divergence indicates that bullish momentum is fading and that the trend may be shifting from bullish to bearish. This might act as a warning to traders to take profit on long holdings or to aggressive traders to consider entering a short position.

Stochastic Slow http://StockCharts.com Definition: Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a momentum indicator that shows the location of the current close relative to the high and low range over a set number of periods.

Closing levels that are consistently near the top of the range indicate accumulation (buying pressure), and those near the bottom of the range indicate distribution (selling pressure). I recommend that you go to http://StockCharts.com and study up on these two old school indicators. These two indications complement one another.

The first is a lagging indicator (MACD), and the second is a leading indicator (Stochastic). When it comes to indicators, I believe the phrase “leading indicator” is a bit of a stretch. It is a question of interpretation and perspective. To use these indications properly, you must first understand the cycles they follow.

Both of these indicators feature two crisscrossing lines. There are both quick and slow lines. A negative divergence occurs when the fast line is higher than the slow line. When the slow line is above the fast line, it is said to be in “NEGATIVE DIVERGENCE,” and when the two lines meet, it is said to be in “CONVERGENCE.” I only mean these cycles, not the divergences between peaks, which some people trade.

It is a subject of interpretation and perspective. The cycle is always as follows:

convergence->possible divergence->convergence->negative divergence->convergence->possible divergence->convergence->negative divergence->convergence->possible divergence->convergence at infinitum.

The MACD loops through these cycles more accurately than the stochastics. The cyclic nature is simpler to recognize than the often-wild fury of the stochastics. Regardless, the preceding cycles are followed. Consider the price action and cycles a clock. Assume that these two oscillators are perfectly circular. And the subject of interest is the fast line tip of both oscillators.

Convergence always occurs at 9 o’clock. Price Action on Pos Divergence: 9 o’clock to 12 o’clock pos price action; 12 o’clock to 3 o’clock neg price action; convergence; price action on neg divergence: 9 o’clock to 6 o’clock neg price action; 6 o’clock to 3 o’clock pos price action; why do these cycles exist?

They express the quantity of incoming volume. On a positive divergence, the majority of the volume coming in is normally bullish, then fades away and becomes more bearish, cycling you to the following cycle of a negative divergence. What do I mean by “coming in”?

These technologies, however, require input in order to function. In order to generate the charts and oscillators, the math need input data. In this situation, the amount of buying or selling orders Knowing this, how can an oscillator or indicator be leading if it simply depends on data that has already occurred and does not accurately reflect what will arrive?

It is a question of interpretation and perspective. The incoming data is characterized by the cycles. Positive Divergence indicates that “usually, the majority of volume coming in is bullish”; “generally” implies that some negative volume is there. Hmmm… As a consequence, Negative Divergence should also have some bullish volume as well, which makes sense given that volume influences candle range. Even when there is a rally, there are pauses that result in a red candle.

Take a few seconds to understand the thoughts above, and then we’ll move on to expand on them later. Elton… it’s your turn❤️

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